Japan's factory output growth slows, adding uncertainty to economic outlook 

Japan's factory output saw a weaker-than-expected increase in September, underscoring concerns about the nation's export-dependent economy. According to Reuters, government data revealed that industrial production in Japan rose by a mere 0.2 per cent in September compared to the previous month, as demand significantly decelerated. This figure fell short of the market's median forecast, which had predicted a 2.5 per cent gain, and followed a 0.7 per cent decline experienced in August.

A closer examination of the data highlights specific challenges within the manufacturing sector. Production machinery output recorded a decline of 3.4 per cent in September, reflecting a slowdown in the manufacturing of industrial robots and metals. Both domestic and international orders for these products showed a significant decrease, a representative from the Ministry of Economy, Trade and Industry (METI) told Reuters. The METI official attributed this phenomenon to waning investment appetite, partially influenced by increasing interest rates both domestically and globally.

In contrast, there were some bright spots within the manufacturing landscape. Output in semiconductor manufacturing equipment surged by 13.2 per cent month-on-month in September. However, the official cautioned that the recovery of chip and electronic device production is unlikely to occur in the near future. On the automotive front, the production of automobiles saw a substantial increase of 6.0 per cent in September, rebounding from disruptions caused by a typhoon and system failures. Japanese automakers, including Toyota Motor and Honda Motor, reported robust domestic output figures for September, with Toyota registering a 12.8 per cent increase and Honda climbing by 24.2 per cent year-on-year.

Add WION as a Preferred Source

Despite these fluctuations, manufacturers surveyed by the industry ministry anticipate seasonally adjusted production to rise by 3.9 per cent in October but then decline by 2.8 per cent in November. This prediction aligns with the industry's assessment of industrial output, which is described as "seesawing." The outlook for the manufacturing sector remains uncertain, with sluggish demand expected both domestically and abroad. Reuters mentioned Kota Suzuki, an economist at Daiwa Securities, who emphasised that production is not situated in an environment conducive to a substantial recovery.

In other economic indicators, Japanese retail sales exhibited a 5.8 per cent year-on-year increase in September, marking the 19th consecutive month of gains. This performance closely mirrors the median market forecast, which predicted a 5.9 per cent increase. However, the data also showed that compared to the previous month, retail sales in September slightly dipped by 0.1 per cent, following a 0.2 per cent growth in August.

(Inputs from Reuters)

WATCH WION LIVE HERE